Investors looking for stocks in the Internet - Commerce sector might want to consider either TripAdvisor (TRIP - Free Report) or Amazon (AMZN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, TripAdvisor is sporting a Zacks Rank of #2 (Buy), while Amazon has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TRIP has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TRIP currently has a forward P/E ratio of 15.67, while AMZN has a forward P/E of 72.08. We also note that TRIP has a PEG ratio of 1.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMZN currently has a PEG ratio of 2.63.
Another notable valuation metric for TRIP is its P/B ratio of 2.56. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, AMZN has a P/B of 16.56.
These are just a few of the metrics contributing to TRIP's Value grade of B and AMZN's Value grade of D.
TRIP stands above AMZN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TRIP is the superior value option right now.